I take pleasure in sharing my thoughts after yet another eventful year.
As a team, we are proud to have continued our progress through a year that was relentless
with continuing inflationary pressures, ongoing wars and new supply chain disruptions. We
are globally connected to our customers, building capacity for scale and efficiency, and
passionately engaged with our people and society.
THE YEAR THAT WAS.
After continuous growth in FY22 and FY23 post-COVID-19, we are now
experiencing some consolidation and moderation in growth due to reduced inventories as the
supply chain has improved.
The ongoing wars in Eurasia, the new conflict in the Middle East region
and the Red Sea crisis have created new challenges.
The continuing economic conflict between the USA and China has opened
up new doors of opportunities. We have utilised this moderation phase to prepare for
future growth and diversification.
THE HIGHLIGHT FOR FY24
In this consolidation phase, we have managed to maintain our revenue
and Gross Margins. The strategic acquisition of DR Axion India Pvt. Ltd. has enhanced the
companies' operational efficiencies and this synergy has enabled deeper engagement with PV
segment in India and also opens doors for export to Korea and othe global markets.
We are setting up new Aluminium facilities in North India where we were
not present to capitalise on the growing demand for our products.
Our strategic investment in backward integration into specialised large
ferrous castings to cater to off-highway/ power generation engines, renewable energy and
capital goods will add considerable strength to our machining operations.
INDIA-ASA GLOBAL MANUFACTURING HUB
India's contribution to global manufacturing is on the rise, a trend
that should be sustained over the medium term. India's productivity grew by 5.6% on
average annually, second only to China.
India has attracted significant interest as a manufacturing hub,
particularly for key sectors like automotive, engineering, chemicals, pharmaceuticals and
consumer durables.
This is happening owing to two important factors: 1) growing
geopolitical stresses have mandated global players to diversify their sourcing bases, and
2) the increasing costs in developed markets will dent their competitive advantage over
time.
., India, on the other hand, continues to allure with a promising
talent pool, strong domestic economy, improving infrastructure and
¦ the spirit of Make in India to achieve the global dream of
being a preferred manufacturing destination.
While many have already established their manufacturing footprint in
India, new global players are looking to set up operations or initiate sourcing from
India.
Craftsman is poised to gain from this change. This will open up
incredible opportunities for manufacturing companies like ours.
OUTLOOK
In India, the future of energy and mobility is undergoing a
transformation. We have committed strategic investments that will prepare us for this
change and allow us to leverage our solutions for emerging opportunities, ensuring a
sustainable future for all.
In the legacy Powertrain vertical, we have invested for few MNCs who
have setup new manufacturing facilities in India. Although it is in the initial stages of
operations, it is poised for growth in the coming years. New MNCs are also looking to set
up manufacturing facilities/ sources from India; we have some engagements and commitments
from a few of them.
We are growing our direct and indirect exports, and these products are
globally accepted.
All leading industrial engines manufacturers for multi-varied
applications, including power generation, as well as IC Engines used in Off Flighway
applications such as mining and construction, are striving towards sustainable Net Zero
Emissions with new technologies and flex fuels such as FI2, LNG, Bio LNG, HVO, Synthetic
Diesel, etc. The possibility of flex fuels will extend the useful life of current IC
engines. This has sparked another wave of development of new engines that are more
efficient with higher power densities. Craftsman is engaged with major engine
manufacturers and will stand to gain from this transformation.
In the PV segment, it is observed that smaller capacity Plybrid Engines
are far more efficient with a lesser C02 footprint providing same or better power output
as compared to their much larger conventional IC Engine siblings. This will lead to
development of new engines to replace the currently produced conventional IC Engines and
they are expected to remain in use beyond 2035, which augurs well for the Company.
The demand for power generation engines is on the rise owing to an
upswing in two sectors:
• India's sharpened focus on industrialisation has put the
spotlight on increased mining activities. Demand for minerals is growing owing to
heightened activities in the construction, infrastructure, technology and energy sectors.
In addition, reducing manufacturing foot print in Europe and continued growth in Rare
Earths mining
is offering India an opportunity to be part of the global supply chain.
• World is consuming data like never before, mandating the
creation of large data centers. This has increased the requirement for large power
generators (as backup).
The demand from these sectors is expected to remain buoyant for the
next decade.
Our fully integrated foundry, which is currently a work-in-progress,
along with the precision machining facilities for large parts, will cater
to this requirement. These niche facilities will position us perfectly
to offer end-to-end manufacturing solutions in the Powertrain and industrial engineering
segments. There are only a few global players for these large engines, and we are engaged
with them, in some cases with commitments. This increase of global exposure in powertrain
reduces the volatility of cyclic nature of domestic commercial vehicle business and brings
stability to weather the cycles by expanding the base to multiple sub-segments of large IC
Engines.
In the Aluminium vertical, our new plant in Bhiwadi, which is under
construction, will enable us to scale up and cater to customers in the northern region.
With a growing focus on lightweighting in the automotive segment, Craftsman is equipped
with the facilities and technology to capture the demand for structural and other vehicle
parts in Aluminium.
The fruition of the above strategy and investments will go a long way
in sustaining our trajectory over the medium term.
OUR KEY TAKEAWAY
Craftsman is firmly poised to accelerate its growth by
• Synergising our operations from the acquisition
• Engaging deeper with our customers
• Augmenting capacities that are aligned to foreseeable
opportunities
• Investing in capabilities that open new growth avenues (Backward
integration into specialised large ferrous castings)
My concluding message is that our measured steps perfectly position us
to capitalise effectively and efficiently on emerging opportunities and unleash value for
all our stakeholders.
1 Our every action reflects our commitment to quality,
agility and sustainability. This will ensure that Craftsman remains the strongest player
in our business space, thereby maximising shareholder , value and the communities we
serve. I sincerely thank all our stakeholders for their trust and support. I am confident
that we will script an exciting growth journey ahead.
Warm regards,
Srinivasan Ravi
Chairman & Managing Director